Pooling Our Resources to Serve Children Well

We need new thinking about the operating environment we currently frame as a 'marketplace'. We need a courageous, informed articulation of what is happening now, and the start of the thinking that can move us towards a method of effective working, both for quality of care and the health of our finances.

Now is the time for some cool reflection after the recent heated discussions regarding the operational matters of residential child care, and maybe also gain some insights in the current debates about outsourcing of services, the practicalities and ethics. As is often the case small sectors, like children's homes, have already been exploring the territory and frequently their learning is valuable.

We need new thinking about the operating environment we currently frame as a 'marketplace'. We need a courageous, informed articulation of what is happening now, and the start of the thinking that can move us towards a method of effective working, both for quality of care and the health of our finances.

Rigorous analysis has been constrained by an immediacy of events and a reactive perspective. Discussions about the state of residential child care to date have been underpinned by interpretations of the limited available data and the research base, itself already limited by scant funding over the years. Historical analysis shows we are repeating discussions from previous decades, caught by deep cultural and psychological resonances. Notably these centre around the themes of the costs and outcomes of residential care, and if we cannot rapidly develop an insight into the history of our past, failure can easily be our future.

A new discussion paper from the National Centre for Excellence in Residential Child Care, 'Pooling our resources to serve children well', http://www.childrenengland.org.uk/wp-content/uploads/2012/06/Pooling-our-Resources-to-Serve-Children-Well-Final.pdf takes the premise that the economics and ethics of placing a child cannot be separated - our future systems must be more sensitive to both need and cost. To take this premise means stepping along a road, imperceptibly, incrementally and unconsciously, from social work, care and its legislation to contract law; from relationships and parenting to administration and finance; and asking whether they are currently working in harmony or in conflict.

Exploring the relationships between our ethics and our economics in the residential care sector, the proposal is made that the sector needs to embrace new economic thinking to help shape the sustainable relationships necessary for the future.

The new insight NCERCC provides is that the residential child care sector operates as an imperfect market. It makes clear that market competition as it is currently conducted does not work now, even in its own stated terms. Making it even more complicated, as is being pursued by Government, will not make it more efficient. It may even make things worse.

In its place NCERCC highlights new economic thinking that could support a move on from the constraints of the past. The rules by which we currently conceive and operate must be changed, creating contracts, agreements, incentives, constitutions, to enable cooperation (instead of competition) for mutual benefit. In this shift of thinking, NCERCC have been influenced by the ideas of Nobel Prize winning economist, Elinor Ostrom, and her analysis of Common Pool Resources(CPR).

CPR addresses situations where a group of people depend on a resource that everybody uses but nobody owns individually (or in the case of Residential Child Care is disparately owned amounting to no one having ownership that can result in collective responsibility being exercised). CPR acknowledges that one person's use of a common resource affects another person's ability to use the same resource at the same time. The sustenance of common resources demands the creation of collective institutions and processes, formal or informal, for undertaking and managing demand for, and use of, society's resources in a way that leaves capacity intact for others to use again.

To help explain the idea further, Ostrom gives an example. The word 'commons' originally denoted pastureland. The land can be a common resource, where individual herders were free to graze their sheep. That land can support a limited number of grazing animals. The temptation to graze more than one's share is a rational strategy for an individual herder. But if all succumb to the same temptation, the grass ceases to grow and the value of the pasture to everybody disappears. Voluntary cooperation between all shepherds, based on their shared understanding of this common interest in the sustainability of the pastures, will, says Ostrom, always be more effective than any 'external' system imposed to manage and monitor their use by herders who do not confer or cooperate with each other.

Materialistic strategies for cooperation tend to do very poorly in the long run while altruistic strategies do better. Without enforceable agreements 'cooperating' becomes diverted to a market-driven means of keeping prices at a pre-agreed minimum level. Local Authorities want the lowest possible prices, and as the only customers for residential care, are in a position to pressure prices downwards. This route leads to the destruction of the "commons", that is the depletion of a shared resource by individuals, acting independently and rationally according to each one's self-interest, despite their understanding that depleting the common resource is contrary to the group's long-term best interests.

In a CPR approach Ostrom finds that those who feel inclined towards cooperation with their fellows ('conditional co-operators') will tend to increasingly trust others and be trustworthy as the proportion of those in the 'system' who participate and reciprocate increases. In systems where cooperation is seen and experienced as being the most rewarding strategy, a cooperative 'norm' becomes self-reinforcing. Those who look for the more immediate or selfish return ('Rational Egoists'), will consistently receive a lower payoff, since others will not trust them. Viewed through an evolutionary lens the Residential Child Care sector will only survive with diversity and longevity if we have conditional co-operation as the defining ethic and character amongst us.

NCERCC analysis contrasts this to the current situation where it sees there is work is work to be done to co-produce a contract, to find the potential partners most likely to cooperate, or agree on 'internalised' rules for punishing 'cheaters', or artificially change the incentive ratios. If we were able to create for ourselves the practical collaborative methods for ensuring every child can get to be cared for in the right place, at the right time, every time, then together we could create an institution for collective action that is 'owned' by, and benefits, all participants.